2008 (1) TMI 813 - HC - Indian Laws

Jurisdiction of AEPC and Appellate Committee to adjudicate upon the matter - Held that - Find considerable force in the submission of the learned counsel for the petitioner that there existed force majeure condition as stated supra. In fact the petitioner exported the garments in the export entitlement Category 8, while it was the decision of the Customs Authorities in Germany re-classifying the said garments as falling in Category 17, which was not within the control of the petitioner. This aspect of the matter having not been considered by the First and Second Appellate Committees, it cannot but be said that their orders at Annexures F and H are unsustainable. The writ petition succeeds in part. The orders Annexures- F & H are quashed, and the proceeding remitted to the First Appellate Committee to consider the petitioner s plea of existence of force majeure conditions and to pass orders strictly in accordance with law after extending a reasonable opportunity of hearing to the parties.

Summary

Issues Involved:
1. Challenge to the policy regarding forfeiture for non-fulfillment of export obligations.
2. Justification of AEPC and Appellate Committees' rejection of the petitioner's claim of force majeure.

Issue-wise Detailed Analysis:

1. Challenge to the Policy Regarding Forfeiture:

The petitioner, a garment exporter, was allotted export entitlements under the First Come First Serve (FCFS) quota for the year 1999 but failed to meet the required export percentage, leading to the forfeiture of Rs. 1,29,486 by the Apparel Export Promotion Council (AEPC). The petitioner argued that the policy of forfeiture for exports less than 75% and proportionate forfeiture for exports between 75% and 90% was irrational and unreasonable. The court, however, upheld the policy, stating that the petitioner had consciously agreed to the terms of forfeiture and could not now challenge them. The policy was designed to maximize foreign exchange and ensure full utilization of export quotas, which the court found to be rational and within the government's rights. The court emphasized that policy decisions, especially those related to economic matters, are not subject to judicial review unless they violate statutory provisions or the Constitution.

2. Justification of AEPC and Appellate Committees' Rejection of Force Majeure Claim:

The petitioner claimed that the failure to fulfill the export obligation was due to force majeure, specifically the reclassification of exported garments by German Customs from Category 8 to Category 17, which was beyond their control. The AEPC and the Appellate Committees rejected this claim, stating that the petitioner did not provide substantial legal evidence to support the existence of force majeure conditions. The court found merit in the petitioner's argument, noting that the reclassification by German Customs was indeed beyond the petitioner's control. The court quashed the orders of the First and Second Appellate Committees and remitted the case back to the First Appellate Committee to reconsider the force majeure claim, ensuring a reasonable opportunity for the petitioner to present their case.

Conclusion:

The court partially allowed the writ petition, upholding the policy of forfeiture but remitting the case to the First Appellate Committee to reconsider the petitioner's claim of force majeure. The court emphasized the need for the Appellate Committee to provide a reasonable opportunity for the petitioner to present evidence supporting their claim.